Citadel Securities and Susquehanna Acquire Stakes in Silvergate Bank

The investment firms Citadel Securities and Susquehanna Advisors Group disclosed in filings with the SEC that they held 7.5% and 5.5% stakes in the equity of the crypto-friendly Silvergate Bank. This was reported by Barron’s.

A Citadel Securities-linked source told the publication that the position in Silvergate was not a direct investment and was prompted by activity in the options market.

The company’s shares closed on February 14 up 18%. Over the past year, Silvergate’s market capitalization has fallen by 85%.

According to MarketWatch, the bank’s shares entered the shorts’ top priorities. Short interest in the freely traded shares reached 73%.

For the fourth quarter, Silvergate amounted to $1.05 billion in losses. The company attributed the negative result to a ‘transformation shift’ in the industry linked to several major bankruptcies. The organization reduced its workforce by 40% and suspended dividend payments.

FTX collapse triggered investor concerns about the bank’s resilience and increased regulatory pressure on it.

In November 2022, Silvergate said that on the bankrupt bitcoin exchange less than 10% of its deposits were held. The bank is listed in the list of creditors of FTX.

Senators Elizabeth Warren, John Kennedy and Roger Marshall urged Silvergate CEO Alan Lane to provide detailed information about the bank’s ties to the trading platform.

At the end of 2022, the company faced a class-action lawsuit over the alleged role in transferring user deposits from FTX to Alameda Research accounts.

Earlier, Bloomberg reported an investigation by the U.S. Department of Justice’s fraud division into the bank’s dealings with Sam Bankman-Fried’s firms.

In November, Block.one, the company behind the EOS network, and its co-founder Brendan Blumer acquired respectively 9.3% and 7.5% of Silvergate Capital’s shares.